Joanne Ciulla: Ethics in Business

May 13, 1990

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A senior fellow at the Wharton School at the University of Pennsylvania, Joanne Ciulla taught career-minded students to think critically about the role of ethics in management. She brought a background in philosophy to her classroom, where future CEOs studied ethics and management in business. In this this episode of World of Ideas, Ciulla discussed the role of ethics in the world of business and the meaning of work in our culture. Ciulla noted that people’s lives are often dominated by their work, sacrificing their families in the process, asking: “Is that the kind of sacrifice you want people to make?”

TRANSCRIPT

BILL MOYERS: [voice-over] Wall Street exploded in the 1980s. American business went on a romp. But in the wake of the boom, fundamental questions are being asked about the ethical price of the bottom line. Ethical questions are the stock in trade of Joanne Ciulla. She is senior fellow at one of the nation’s leading business schools, the Wharton School at the University of Pennsylvania. She brings a background in philosophy to her classroom, where students pursuing careers in business study ethics and management. Dr. Ciulla is also writing a book about the meaning of work in our culture. We talked in the library at the Wharton School.

[interviewing] Did you see the movie Risky Business?

JOANNE CIULLA: Yes.

BILL MOYERS: Tom Cruise plays a high school student who allows a prostitute to use his parents’ house as a brothel. He’s in absolute awe of her business skills, of her absence of guilt and fear and doubt. He looks at her devotion to immediate gratification and says, ”What a capitalist.” Now, who’s teaching students more about capitalism, you or Tom Cruise?

JOANNE CIULLA: I think probably Tom Cruise is, though I don’t know if he would agree to that. You’ve got to remember, we’ve just gone through a very peculiar period of history. I think the 1980s are going to be remembered as a very odd time in American history. Everything in our culture was geared up towards this new enthusiasm for entrepreneurship, competitiveness and business. It had always been present in American culture, but we’ve gone through some pretty big hits. We’ve gone through oil crises, we’ve gone through recessions and they’ve left a very deep imprint on young people.

One thing I noticed between, say, 1975 and 1985, was the enormous change in the attitudes of students about not only business, but about the future. I think one of the biggest problems facing us and which caused some of this aberrant ’80s behavior was, we came out of a very down era. The Japanese were beating us, we were losing our competitive edge, we had now gotten this president who was enthusiastic, so it was a time when great things were going to happen. And as a result, everything took on the short-term, boom-town, get-it-while-you-can sort of gold rush atmosphere. And I think that’s what you see in Tom Cruise, to some extent. I mean, obviously he’s not going to run a bordello forever. He’s excited about entrepreneurship, which is the other big word, which is you go into business and you make a bunch of money and you do it by taking risks and you make it fast.

BILL MOYERS: That seemed to be the nerve end of the ’80s. And we had the lesson straight from the horse’s mouth, rules are for fools-

JOANNE CIULLA: Right.

BILL MOYERS: -greed is good, he who dies with the most toys wins.

JOANNE CIULLA: Yeah.

BILL MOYERS: Do you think that was — those were exaggerated, or isn’t there something new and different at the heart of American entrepreneurial capital today?

JOANNE CIULLA: Well, they were exaggerations, to some extent. There was an awful lot of fun in the ’80s, too. I mean, when I talk — most of the students we have here worked on Wall Street, came from Wall Street, you know, into business school, had been in the thick of it all during this time. And it was a lot of excitement and fun for people, you know, it was a great place to be. They had lots of responsibility, they were making lots of money and so there is a playfulness to that. There also is this sense of the fact that we were in a period of deregulation. I mean, part of what happened in the financial markets was a result of deregulation. It was as if the harnesses had been let off, there was all of this enthusiasm, and on Wall Street, people were pushing the limits, you know, pushing the limits of the law. They were pushing – they were inventing new financial tools. They were seeing how far they could go.

BILL MOYERS: Somebody said to me just this weekend that the symbol for our culture, and the business culture in particular, has become the digital clock, which looks at only the present moment, with no hint of yesterday or tomorrow, of the past or the future. Only the present is what counts, and that that digital clock, or digital watch, is now the emblem of American business. Do you think that’s so?

JOANNE CIULLA: I think American business is realizing it better not be so. And here’s where I think business schools and business strategists are starting to go through a big change. And the big change is a new concept — well, it’s not really very new, but for us it’s new, and we’ve sort of learned it from the Japanese. It has to do with sustainable competitive advantage. And when you start talking about sustainable advantages, or sustainable businesses, it means you’re going to need to understand something about what’s transpired in the past, you’re going to have to have some vision of what the future is going to look like, if you want to have a business that’s going to last and grow and develop.

In the future, you’re going to have a work force that is made up — `it may well be that white males are the minority group in it, that are going to be made up at least half of women, maybe more than half of women. They’re going to be made up of all sorts of minority groups. We’re going to find that family concerns are more important. Now, you say, “Well, you know, these businesses should do these ethical issues,” which is what people are always asking me, at least, you know. And I like that question, because I don’t really want to see that clear a line between the two. I mean, they should be very integrated together. We’ve got to say, what kind of people are going to be working in the future? What are the environmental problems going to be in the future? What are the social problems going to be in the future? All these things impact on business. You can’t operate a business in a vacuum. So once again, you see that there’s a very strong relationship between ethical thinking and future-oriented thinking.

BILL MOYERS: You mentioned the Japanese, and they’ve been through a round of ruthless business scandals, like the — you’re not holding them up as an ethical ideal, are you?

JOANNE CIULLA: No. And when you look at what’s going on in Japan, I mean, there have been scandals on the Hong Kong stock exchange, the Swedish stock exchange, the French, we’ve seen everywhere we see almost a mirror image of some of the things that have gone on in Wall Street. Part of what’s happening globally is that business practice is changing. We’re living in a global economy, and it’s no longer in Rome do as the Romans do. Business isn’t just the laws and regulations that make it up; it’s a set of unsaid understanding. And when you start buying stock from the Hong Kong stock exchange and you live in New York, you make certain assumptions about what you’re doing. The people in Hong Kong may be making different assumptions about what they’re doing. In some of these stock exchanges, it’s almost madness to buy stocks on them, because they have a different set of understandings about insider trading.

BILL MOYERS: So is it becoming a more amoral international culture?

JOANNE CIULLA: Well, what’s going to eventually happen, I think, and from discussions with people in other places, is that we’re going to have to come up with some international sets of norms. This is the same problem with bribery, and questionable payments. You may argue that in a particular society, bribes are common, everybody uses them, it’s understood, fine. Why should we as Americans be so edgy about bribes, you know? We have this foreign corrupt practices act that says we’re not allowed to pay them. But when you start doing business with lots of different people from lots of different cultures who don’t know all of these practices and customs and aren’t sensitive to them, first of all, is that an efficient way to do business, if you’re talking about business on a global scale? Is it efficient that every stock exchange would have its own norms for what insiders are?

You see, eventually there’s got to be a convergence of rules, so that we can all do business with each other. I mean, that’s part of the practical issue of all of this. It’s not that our standards are higher than anybody else’s, or better than anyone else’s, or, as I like to call it, it’s not that we’re ethical imperialists, but rather that at some point there’s going to have to be standards that everybody understands, in order to make this kind of global business possible.

BILL MOYERS: Peter Drucker says that it’s a mistake to try to teach business ethics, there really is no such thing as business ethics. Ethics, he says, is for everyone. It’s the rules of individual behavior, whether we work in a corporation, a factory, as a journalist or a florist.

JOANNE CIULLA: Well, you know, the other thing people usually say when you say you teach business ethics is they say, “Well, isn’t that a contradiction in terms?” And yes, it is. And let me explain that when we think of ethics, we think of someone doing good things and performing good actions because they want to and because it’s the right thing to do. When we think of business, we think of actions, we think of strategies, we think of behaviors that are all geared towards a particular end, which is to make a profit. So there’s a kind of contradiction there. One of the chief questions in business ethics is, can a business act ethically, if that’s the criteria? This comes from the philosopher Immanuel Kant, who said the only good is the good will. Now, can business have a good will? When a company sets up a program for school children in a neighborhood, say they donate computers and staff to train them, is the company doing it because they have a good will or are they doing it because they want to have good PR? This is something for PR. This is a crucial question.

One of the chief questions in business ethics is, can a business act ethically, if that’s the criteria? This comes from the philosopher Immanuel Kant, who said the only good is the good will. Now, can business have a good will?

On the other hand, we’re not saying that ethics in business is different than ethics in the rest of life. What we’re saying is that in business, ethics functions in a particular context, and the problems of business make it difficult to understand how to apply the ethical principles we have.

BILL MOYERS: What about the business executive? I know you, on other occasions, expressed some discomfort with the likes of a T. Boone Pickens and Donald Trump because they have-their wealth and power seem alienated from some broader aim of society.

JOANNE CIULLA: Yes. I mean — and the question is, there’s a whole — we have this whole wonderful system of democracy. We have business laws and regulations and all sorts of things that allow business to operate. And one of the things any business person has to respect is that they should operate in a way that does not destroy those things which make their business possible. In businesses themselves, though, it’s not these individual things, these are sort of rare dramatic events that occur, but with all these leveraged buyouts and takeovers, the crisis that’s going on inside of corporations inside this environment is a crisis of trust.

BILL MOYERS: Trust?

JOANNE CIULLA: Trust, yeah. Because

BILL MOYERS: Public trust of-

JOANNE CIULLA: -public trust, employee trust, I mean, how can a company have loyal employees when the employees don’t know whether tomorrow their company will get taken over? Yet companies demand an enormous amount of loyalty and commitment from employees, and yet they’re not willing to give the same back to them. So you have, you know, trust and loyalty are reciprocal relationships. You have to have two sides to them. You can’t expect somebody to be trustful or loyal if you aren’t going to be. There’s also the question of justice. There’s enormous wage disparities between what people at the top of the company make and people at the bottom of the company make. Americans do have, deep down inside, a strong strain of egalitarianism, and we may have reached a point where, to become downright offensive, the heads of corporations that can be taken over tomorrow and everyone can be out of business in the next moment are being paid enormous sums of money.

BILL MOYERS: You say we’re facing in this country a moral crisis of work and meaning. In what sense?

JOANNE CIULLA: One of the questions I’m concerned with is the dominance that work has come to play in everyone’s life as the arena in which they have social interactions, they build their friendships, it’s responsible for taking care of their family, taking care of their children. In some ways these are very positive and important things, because it allows people to work. On the other hand, we’ve looked at the demise of other institutions in our society, like community. We’ve seen families, high divorce rate, problems in families. The question is do you want most of the things that provide meaning in your life, and social interaction, do you want to have to depend on your business or your work to provide those things? And in the precarious economic environment in which we live, is that really smart, to put your hands-your happiness, and your notion of meaning, in the hands of the economy?

BILL MOYERS: But it’s certainly realistic, because most of us spend more time at work than we do sleeping or with our families, so if we don’t find some contribution of work to the meaning and experience of life, then we’re going to be vacant, to a large extent.

JOANNE CIULLA: Yeah. And the question is, people do put meaning into the context of how they think about their lives, but they supply the meaning, they decide what that meaning’s going to be. My concern is, should the workplace be constructing meanings for people?

BILL MOYERS: You think that’s happening?

JOANNE CIULLA: There’s a lot of people who would like to be able to do it, because it would be the ultimate motivating tool.

BILL MOYERS: Well, the Japanese have done very well at it. Their managers have become almost holy men.

JOANNE CIULLA: Yeah. Yeah. But you have to look at a broader context there, of Japanese society. I mean, the backdrop in which this all occurs is very different than the backdrop of American life. Their notion of community is very different. Their notion of the individual in relationship to the group is very different than ours. So I think that the Japanese, to some extent — they’re probably, by the way, going to become more like us. I mean, that’s what I really think is going to happen down the line. But right now, I don’t think that’s fair. We have to look at the institutions in American life, and we have to look at the ones that are declining and the ones that seem to be taking dominance right now.

BILL MOYERS: And the economic institutions are becoming dominant.

JOANNE CIULLA: Yeah.

BILL MOYERS: At the expense of -or because of the collapse of neighborhoods, communities, towns, and if you live — if you commute to work two hours, you have no time when you get home to be a volunteer fireman, or to go to the school board meeting, or to attend-

JOANNE CIULLA: Right.

BILL MOYERS: -the functions that we used to do when we lived in small towns. So the workplace does become almost the new home.

JOANNE CIULLA: Yeah. But it’s a precarious home, because it doesn’t offer what the other institutions offer. It’s an unstable institution. You could lose your job-

BILL MOYERS: The economic-the corporation, the company.

JOANNE CIULLA: Yeah. Mm-hmm. It’s unstable, we’re not — you could be fired tomorrow, we have a doctrine called employment at will, people can lose their jobs tomorrow, they can lose friends on the job who have to leave, get transferred. So I’m raising the question, is this the kind of institution that we want to look for those kinds of meanings in? What I’m worried about is people seem to come to expect more and more from the workplace.

BILL MOYERS: What do you think they expect?

JOANNE CIULLA: Well, they expect interesting work. I mean, we’ve got a fairly educated work force here. We’re expecting challenging jobs, we’re expecting interesting jobs, we’re expecting jobs that make us feel great about ourselves. And, in our society, people are defined by their jobs.

BILL MOYERS: But is there anything really too wrong about finding a substantial part of your identity in your work?

JOANNE CIULLA: There’s nothing wrong with you finding it. What’s wrong is someone trying to tell you what it is. And I think that’s the big difference.

BILL MOYERS: You’re suggesting that work is promising more than it can deliver.

JOANNE CIULLA: Mm-hmm. Look, if anyone knew how to create meaningful work, I mean, it would be great, it would be wonderful. If anyone knew how to define it so that we could all sort of go after it, that would be wonderful too. I’m not even sure everyone wants meaningful work. I mean, I guess if you went up to every person on the street and said, “Do you want meaningful work?” It may seem, in our culture, kind of irrational to say, “No.” In other cultures they might say, “No, I’d like to not have to work at all.” You don’t usually find too many people who say that.

BILL MOYERS: Well, you might not want to, but you’re going to have to spend time out there, and when you do, don’t you want that workplace to be as “meaningful” as possible?

JOANNE CIULLA: Do you want it to be as meaningful or do you want it to be as comfortable, accommodating to your lifestyle? You know, Studs Terkel in his book, Working, a splendid book, years ago, started out by saying for some people, work is a daily humiliation. Well, you don’t want work to be a daily humiliation, obviously. You want to get-you get some self-esteem from work, that you have a role. But we’ve got to think about what kinds of work are available in the world. And maybe what’s needed-I mean, it’s interesting to look at government work. Most people these days, it’s not chic to talk about government work as being great. Some of the best innovations in making work accommodate people’s lives is found in the government. They were the first to use flextime. Flextime is a very radical innovation in the workplace. I think it has an enormous humanizing effect. It allows people to fit their life schedules, instead of having to have their life have to conform more to work. It makes some allowance for making work conform to their lifestyles.

Some of the best innovations in making work accommodate people’s lives is found in the government. They were the first to use flextime. Flextime is a very radical innovation in the workplace. I think it has an enormous humanizing effect.

A lot of these questions will be on the table in the future. There have been issues about taking work home, computerization of work, and of course, then there’s the dark side of that, which is the person with the fax machine in the car and the telephone and the buzzer, so that they can never get away from work.

BILL MOYERS: But what are you precisely saying, then, that concerns you about work? You’ve talked about this moral crisis of work and meaning. What is the moral crisis?

JOANNE CIULLA: The moral crisis is trying to understand how to strike the balance between work and the rest of your life. And I think that it’s a pressing crisis right now, because of the importance and the dominance of the economic institutions in our culture. And that each person, I think, is struggling in terms of, you know, dual-career families, raising children, to try to find some balance there. And so I’m saying be careful. We want the workplace to be better. We want work to be humane, interesting, et cetera. But on the other hand, we don’t want it to be something that takes over the other elements of people’s lives.

BILL MOYERS: One of the best-selling books of 1980 was In Search of Excellence, and the people who wrote that, the fellows who wrote that, argued that people so desperately need meaning in their lives that they will sacrifice a great deal to the institution that gives it to them. Do you find that’s so?

JOANNE CIULLA: A lot of the times, we see people do sacrifice everything for their work. And what do they sacrifice? They sacrifice their families, they sacrifice their children. Is that the kind of sacrifice you want people to make? Sure, you want people to work hard, you want them to be energetic and enthusiastic. But part of that has to do with some basic things about the workplace itself. I mean, look at what makes work frustrating to people.

First of all, one of the key causes of stress on the job, of stressful things, if you look at-listen to the stories you hear. What makes people feel that kind of stress? The problem is ethical issues. There’s an ethical distance going on. That’s what-that’s another reason why business ethics is inseparable from talking about managerial problems. The cause of stress? Well, you have one set of values and beliefs, and yet when you go to work, those are violated.

Secondly, the question of justice or fairness. Nothing makes people more unhappy at work than feeling like they’re being treated unfairly, that the key of management is a sense of fairness in the workplace. So when you start-you can start going down a checklist and saying, ”Well, what things can a corporation provide that make work a satisfying experience?” And I think there are very practical things they can provide that get down to, once again, good management, good business, fairness, things like that. But meaning? Do you want some sort of religious fervor from your employees?

In some of this literature that came after In Search of Excellence, that’s what you sensed, is they want a kind of religious zeal, an excitement. And even some of the language in that book was very sort of — almost like a religious revival, that you had to find people’s “hot buttons.” I find that a rather offensive phrase, that you had to find their “hot buttons,” you had to get them excited and souped-up. Well, I don’t think, first of all, that’s a very sustainable kind of management strategy. You can’t have people souped-up all the time. Some people have found it offensive. There have even been scandals where companies have tried some of these programs to get their employees souped-up, and they’ve protested, calling it manipulation.

BILL MOYERS: Well, it seems to me to be difficult for corporations to engineer meaning for people, because the workplace in a corporate environment is always one of unequal power. There’s always competition and conflict, there’s always a rough form of injustice to it, in that no matter what managers-the managers you teach try to do, it can never ultimately make the workplace a religious experience. .

JOANNE CIULLA: Right. And there’s another facet to this problem, too. We also live in a consumer society. And if you look at the three major values that we’re constantly juggling in our lives, we juggle the idea of, you know, something like meaningful work, or the role that our work plays. We juggle, you know, how much stuff do we want? How many cars do we want, do we want a vacation home, do we want to buy a house? Do we want a new piano? You know, what is it that we want? So there’s the role of work, there’s the role of consumerism and the role of leisure. And you know, ideally, we’d like to have all of them. We’d like to have a great job, be rich and have plenty of time off so that we can do fun things. Or maybe, if you have a really meaningful job, you don’t care that much about time off, because you get so much out of your work. It’s interesting, though, that leisure pursuits have so much turned into work pursuits for people today.

BILL MOYERS: Yeah.

JOANNE CIULLA: I mean, even play isn’t play. We work at our tennis game. We work out. We listen to music to relax. We don’t seem to do things to do them. So yes, we’ve made enormous progress. But yes, be careful about the argument we’ve made progress which means we don’t have to do anything else. I think the role that creative business people and people in academic institutions and people who are playing the role of a social critic constantly have to ask the question, how do we make things better? I mean, you know, we talked about technology bringing all this progress.

How do we make work better for people? This has been a constant struggle, you know. I mean, we have gone through slavery, we’ve gone through hideous industrial conditions, we have gone through periods where people became “the man in the gray flannel suit,” in the ’50s, there was all this literature. The ’50s literature, by the way, is fascinating, because they raise some of the issues that I’m raising now, of what does it mean for us to subsume ourselves under these huge organizations, and become part of them, and fit into that environment?

But we have to think about how to make things better. It seems to me the notion of progress is better, and part of better isn’t just more money or better technology or more efficiency. And of course, efficiency is an important value, dominating value, in our society today. But to make it better ethically. To make-how do you make people work? How do you make people work in a way that doesn’t exploit them? How do you give people work that-I mean, how are you fair? Can we become-can we make progress in fairness in the workplace? Can we make progress in justice in the workplace?

BILL MOYERS: Old questions.

JOANNE CIULLA: Oh, very old. Yeah.

BILL MOYERS: What gives meaning to your life?

JOANNE CIULLA: My work.

BILL MOYERS: [voice-over] From the Wharton School of the University of Pennsylvania, this has been a conversation with Joanne Ciulla. I’m Bill Moyers.

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